Final answer:
The price of the bond is equal to its face value of $1,000, since the coupon rate is equal to the yield to maturity.
Step-by-step explanation:
The question asks us to determine the price of a bond when the coupon rate is equal to the yield to maturity (YTM). In the given scenario, a $1,000 par bond with a 12.25% coupon rate has 10 years to maturity, and the yield to maturity is also 12.25%.
When the coupon rate equals the YTM, the bond is priced at par value, which, in this case, is $1,000. Therefore, even without a detailed calculation, it is safe to say that the bond will trade at its face value or par value of $1,000.